Sunday Times

It’s too early to cast fad­ing star into a mere cameo role

- Gold­stuck is founder of World Wide Worx and ed­i­tor-in-chief of Gad­ Fol­low him on Twit­ter @art2gee Iceland · Tencent Holdings · Netflix · Austria · Belgium · British Sky Broadcasting · DStv · Africa · Naspers · MultiChoice

The an­nounce­ment that Naspers will shed its pay-TV di­vi­sion has led many to be­lieve that Mul­tiChoice is on its way down. Af­ter all, the par­ent com­pany has evolved from me­dia giant to in­ter­net giant thanks to good bets on the fu­ture.

It made a for­tu­itous in­vest­ment in $400bn (R5.6-tril­lion) Chi­nese jug­ger­naut Ten­cent when it was worth a frac­tion of that, par­lay­ing a $132m in­vest­ment into a global e-com­merce em­pire.

But there is a deeper jus­ti­fi­ca­tion for the sep­a­rate list­ing. Mul­tiChoice re­mains a mas­sive suc­cess story, with a R47.1bn turnover in the past fi­nan­cial year. It em­ploys 9,000 peo­ple and its Phuthuma Nathi share scheme is one of the great BEE suc­cesses. How­ever, it is al­most im­pos­si­ble to men­tion it with­out that other en­ter­tain­ment giant, Net­flix, with its global reach and a mas­sive orig­i­nal-con­tent cat­a­logue.

“Ul­ti­mately, al­though we lead in pay-TV, we are go­ing to have to tran­si­tion into the in­ter­net-con­tent world, which is very dif­fer­ent from the com­merce world,” said Im­tiaz Pa­tel, CEO of video en­ter­tain­ment at Naspers. “We have a strong lo­cal con­tent ca­pac­ity. It’s a big dif­fer­en­tia­tor and we will dou­ble down on in­vest­ment in lo­cal con­tent. Naspers al­ways had to de­cide whether to in­vest back into pay-TV or e-com­merce be­cause it had a smor­gas­bord to choose from. Now we also have a smor­gas­bord of de­ci­sions of where to in­vest but it will be more core to our busi­ness — in con­tent, sys­tems, new tech­nol­ogy and bolt-on busi­nesses.”

The un­bundling an­nounce­ment co­in­cided with news of a part­ner­ship be­tween Net­flix and Bri­tish pay-TV provider Sky. Asked if a sim­i­lar deal was pos­si­ble be­tween Mul­tiChoice and Net­flix,

Pa­tel re­sponded with a cryp­tic “Watch this space”.

While many con­trast Mul­tiChoice’s DStv with Net­flix’s en­ter­tain­ment of­fer­ings, he said, few un­der­stood the cost of sport, lo­cal con­tent and news chan­nels. How­ever, the cost of DStv’s pre­mium pack­age, now close to R1,000 a month, is gen­er­ally re­garded as a bro­ken busi­ness model. It rep­re­sents a pow­er­ful in­cen­tive to jump to Net­flix, at about a tenth of the cost — as long as live sports and news are not a strong in­ter­est.

Calvo Mawela, CEO of Mul­tiChoice Africa, said the value of the pre­mium pack­age was not ap­pre­ci­ated. “We’ve in­vested heav­ily in the DStv Now app so that view­ers can cut across from satel­lite to on­line stream­ing, with all chan­nels now avail­able for many de­vices, and we’ve in­vested in con­tent for our Show­max videoon-de­mand ser­vice. There is no way we can be com­pared with Net­flix.”

Still, peo­ple will com­pare. About 140,000 view­ers have mi­grated from DStv Pre­mium to Net­flix in the past two years. Mawela hopes com­mu­ni­ca­tion of the value of the pack­age has stemmed the bleeding.

The un­der­ly­ing health of Mul­tiChoice is bet­ter ex­pressed in the growth of its over­all sub­scriber base, with 2.5-mil­lion new cus­tomers in the past two years. The cur­rent year is ex­pected to main­tain that rate of growth. It sug­gests that, across African economies where fi­bre broad­band is still a dis­tant dream, Mul­tiChoice will be able to keep the Net­flix night­mare at bay.

Com­par­isons with Net­flix don’t do DStv jus­tice, says Naspers

 ?? Arthur Gold­stuck ??
Arthur Gold­stuck

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